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Strong Growth in Dubai Non-Oil Sector Drives Confidence

By the conclusion of the third quarter, confidence in Dubai's non-oil economy rose significantly, owing to a quick increase in new business.

Confidence in Dubai’s non-oil sector has received a significant boost by the end of the third quarter, driven by a rapid upturn in new business. 

The latest PMI survey data, released on Tuesday, indicates robust growth in the private sector economy.

Accelerated Growth in the Private Sector:

  • The growth rate in Dubai’s private sector economy has accelerated for the first time in three months, primarily due to a strong rise in sales.
  • This boost in business confidence marks the highest level since March 2020, according to S&P Global Purchasing Managers Index data.

Challenges Amidst Growth:

  • Despite the overall positive trend, employment growth in the private sector has slowed to its softest point since February.
  • Firms have also increased their inventories slower, mainly due to a sharper rise in input costs, impacting sales discounting efforts.

Strong Performance in September:

  • In September, the headline PMI reached 56.1, up from 55.0 in August, indicating a robust improvement in non-oil operating conditions in Dubai.
  • A significant contributor to this increase was a sharper rise in new orders during September.

Sales Growth and Economic Conditions:

  • Dubai’s non-oil companies have reported a rapid acceleration in sales growth during September, reaching the highest level in over four years.
  • This growth was stimulated by new clients and improved economic conditions.

Robust GDP Growth:

  • In the first quarter, Dubai’s real GDP grew by 2.8% year-on-year, reaching Dh111.3 billion, surpassing average global rates.

Business Confidence and Future Prospects:

  • While the pace of job creation and inventory accumulation slowed, business confidence regarding future activity improved.
  • Firms’ near-term growth expectations have risen, reaching the highest recorded level since the Covid-19 pandemic.

Impact of Rising Input Prices:

  • Rising input prices have led to increased overall business expenses, which has affected the rate of price discounting.
  • The pressure on costs could lead to capacity constraints if demand rises rapidly.

Positive Outlook for Various Sectors:

  • The survey indicates that the pace of expansion has quickened to the highest level since June 2019 due to improving demand conditions, increased sales efforts, and the ability to provide more services to clients.
  • Additional sector data highlights faster growth in travel and tourism, wholesale and retail, and construction.

Promising Wholesale and Retail Sector:

  • The wholesale and retail sector has particularly shown a rapid acceleration in growth, with a sharper rise in sales in September.
  • Although slower than mid-year levels, it demonstrates substantial business activity uplift.

Confidence in the Future:

  • Companies are hopeful that strengthening demand conditions will support future demand and activity.
  • Greater optimism is notably driven by the construction wholesale and retail sectors, marking the highest degree of confidence since March 2020.

Get all the latest update on UAE Times Now

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